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Medicare Compliance in Workers’ Compensation and Liability Cases:
Conditional Payment Claims, Mandatory Reporting and Medicare
Set-asides
Joe Isbell
Carr Allison
100 Vestavia Parkway
Birmingham, AL 35216
www.carrallison.com
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Medicare Secondary Payer Act
• MSPA was enacted in 1980 • Medicare is “secondary” payer when
any other entity could possibly be considered a primary payer
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Complete Medicare
Compliance
Conditional Payment
Claim/Lien Resolution
Section 111 Reporting
Future Medical Expenses(Medicare Set-asides)
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Conditional Payment Claims (CPCs)
• Expenses paid by Medicare prior to the date of settlement or judgment
• Research CPCs prior to settlement– Report all injuries being settled, including
disputed ones
• Must resolve CPCs when case with Medicare beneficiary settles
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Possible Options for Repayment
• Direct payment to Medicare by defendant
• Put Medicare on the settlement check (not required by law)
• Claimant responsible for repayment
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Amount CMS May Recover
• CPCs reduced for procurement costs
• Medicare may recover FULL amount of CPC up to total settlement amount even if injury or responsibility for injury is disputed
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Waiver/Reduction
• May request on behalf of beneficiaries if financial need
• Pre-settlement compromise may also be an option
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Interest and Penalties Under the MSPA
• Accrue if Medicare is not repaid within 60 days of formal demand
• Double damages if Medicare sues to recover
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Risk Mitigation Strategies - CPCs
• Maintain accurate, current information about injuries
• Carefully report injuries– If using an agent for Section 111 reporting,
review their plan to ensure accuracy of reported codes
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Complete Medicare
Compliance
Conditional Payment
Claim/Lien Resolution
Section 111 Reporting
Future Medical Expenses(Medicare Set-asides)
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Section 111 Reporting Requirements
• Will assist Medicare with recovery of CPCs and to keep Medicare from paying when primary payer exists.– Duty to “notify” Medicare has existed since
1980. Section 111 imposes a penalty of $1,000 per day per claim for failing to do so.
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• Electronic transmission of data related to certain settlements, judgments, awards and other payments to Medicare
Section 111 Reporting Requirements (Cont.)
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Claims That Must be Reported:TPOC Claims
• TPOC (Total Payment Obligation to Claimant)– Claims that are “resolved (or partially resolved)
through a settlement, judgment, award or other payment”
• regardless of whether there is admission or determination of responsibility
– that involve a Medicare beneficiary and– are settled on or after October 1, 2011
• Must be reported beginning the first quarter of 2012.
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TPOC Exceptions To Reporting• The following do not have to be reported:
– TPOC amounts of $5,000.00 or less through January 1, 2013
– TPOC amounts of $2,000.00 or less from January 1, 2013 - December 31, 2013
– TPOC amounts of $600.00 or less from January 1, 2014 - December 31, 2014
• After December 31, 2014, all TPOC claims must be reported
• TPOC claims with an ORM aspect must still be reported – no exceptions
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Claims That Must be Reported:ORM Claims
• Claims for which the RRE still had/has responsibility for ongoing medical payments as of January 1, 2010– such as open medicals in wc claims
(regardless of date of accident)
• Must be reported beginning first quarter of 2011
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ORM Exceptions to Reporting
• ORM files that meet ALL of the following criteria do not have to be reported through December 31, 2012:– medicals only – lost time of no more than 7 days– all payments made directly to the
provider – total payment does not exceed $750.00
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ORM Exceptions to Reporting (Cont.)
• If a claim is actively closed or removed from current claims inventory prior to January 1, 2010, the RRE is not required to report that claim unless the claim is later reopened– Does not include claims which remain open
even if no medicals have been paid for a substantial period of time.
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• Claims in which:– a judgment or defense verdict is rendered
concluding that no money is owed – no claim was made for medical expenses, i.e.,
liability case with property damage only with no release of medicals
• Be careful with general releases!
– there is no settlement, judgment, award or other payment (including assumption of ORM)
– The only payment was a one time payment for a defense evaluation from a provider or physician
Claims That Do NOT Have To Be Reported
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Complete Medicare
Compliance
Conditional Payment
Claim/Lien Resolution
Section 111 Reporting
Future Medical Expenses(Medicare Set-asides)
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Medicare Set-asides (MSAs)
• Money for future medical expenses Medicare would otherwise pay
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Are MSAs Required?
• No
• However, the burden of paying future medical expenses may not be shifted from a primary payer to Medicare
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Are MSAs Required? (Cont.)
• CMS recommends MSAs in certain cases
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CMS Review Thresholds in WC Cases
• CLASS I– Medicare beneficiary AND– total settlement exceeds $25,000
• CLASS II– Total settlement exceeds $250,000 AND – claimant has a “reasonable expectation” of
becoming a Medicare beneficiary within 30 months
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Reasonable Expectation of Entitlement
• If the claimant:– Is currently receiving Social Security
Disability (SSD) benefits– Has applied for SSD benefits– Was denied SSD benefits, but is appealing
denial– Is 62.5 years old or older– Has End Stage Renal disease
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Determining Total Settlement Amount• Money paid at time of settlement for:
– Future medical, indemnity and/or vocational benefits– Claimant’s attorney’s fees – Court costs and filing fees– Medicare conditional payment claim, if any
• Money paid in prior partial settlement, if any, including third party liability settlements
• If using structured settlement, must include uncommuted expected lifetime payout
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Cases Below CMS Review Thresholds
Medicare Beneficiaries
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Cases Below CMS Review Thresholds
Non-Medicare Beneficiaries
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CMS Submission Process
• Start early!
• Allocation reports should be less than six months old
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Risk Mitigation Strategies for MSAs
• Physician involvement
• Claimant’s attorney involvement
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Impact Of Disputes And Defenses
• Dispute among treating physicians
• Legal defenses/judicial determinations
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Lapse In Claimant’s Treatment
• If last treatment was long ago, CMS may require records from other physician(s) who have treated the claimant more recently, including family practitioner
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Prescription Medications
• CMS uses average wholesale prices (AWP)
• CMS includes medications recommended in records and actual prescriptions the claimant is receiving
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Zero MSAs
• May be available if:– Completely denied claim– NO money was paid for medical treatment or
indemnity
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No Appeal of CMS Determinations
• No formal appeal process if CMS rejects proposed MSA amount
• RO will correct obvious mistakes, such as math errors
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WC and Third Party Cases
• MSAs are appropriate in WC/third party cases if the WC carrier or employer is being relieved of obligation to pay future medical expenses
• Same process for approval as WC cases
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MSAs
• Are MSAs required in liability case?– NO
• MSAs are not required by law in any case
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WC vs. Liability Cases
• Difference between WC and liability cases
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BUT . . .
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Guidance From CMS
• One RO has indicated that MSAs are also “preferred” in liability cases
• No formal process for review of liability MSAs like there is for WC, but the “underlying statutory obligation is the same” (Town Hall Transcript)– Law that requires protection for Medicare
when case with Medicare beneficiary settles is the exact same for WC and liability
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Guidance From CMS (Cont.)• When “future medicals are a consideration
in arriving at the settlement . . . appropriate arrangements should be made for . . . exhaustion of the settlement before Medicare is billed for related services.” (Town Hall Transcript)
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When to Use LMSAs
• Claimant is a Medicare beneficiary;
• Future medical treatment likely needed;
• Settlement because of physical injuries/medical claims; and
• Settlement amount more than nominal
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Determining Amount to Set-aside
• Allocation report may be used
OR• The parties may jointly designate reasonable
amount for future medical expenses
OR• Include statement in Release that money being
paid is intended to cover future medical expenses
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Liability Allocation Reports
• May be reduced to take defenses into account!
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When should allocation reports be obtained in liability cases?
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When should allocation reports not be obtained?
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CMS Review and Approval of MSAs
• Some ROs will review and approve LMSAs, although not required
• Will estop Medicare from later claiming that its interests were not protected
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Funding Medicare Set-aside Accounts
• Lump sum
• Annuity
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Administration
• Self-administration
• Custodian Administration
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Questions?
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Joseph P. Isbell
Carr Allison
100 Vestavia Parkway
Birmingham, Alabama 35216
Phone: (205) 949-2931
Fax: (205) 822-2057
